With less than ten days remaining before the United States imposes sweeping tariff hikes on several trading partners, President Donald Trump has called trade with Japan “unfair” and signalled that the 25 per cent tariffs on automobiles may remain in place unless a new deal is reached. Trump’s remarks, made during a Fox News interview aired June 29, raise fresh concerns about a potential breakdown in trade negotiations that could significantly harm Japan’s already fragile economic recovery.
“They won’t take our cars, and yet we take millions and millions of their cars into the United States. It’s not fair,” Trump said, referencing Japan’s limited import of US vehicles while dominating the American market. “I could send one [letter] to Japan. ‘Dear Mr Japan, here’s the story. You’re going to pay a 25 per cent tariff on your cars,’” he added. Trump also suggested Japan could help reduce the bilateral trade deficit by purchasing more American oil and goods. “Now we have oil. They could take a lot of oil. They could take a lot of other things,” he said.
The Trump administration’s temporary suspension of country-based reciprocal tariffs expires on July 9. Without a deal, Japan faces not only the continuation of existing 25 per cent automobile tariffs but also a jump in broader duties from the current 10 per cent to as high as 24 per cent. These proposed levies would hit key export sectors, especially autos, which account for about 28 per cent of Japan’s $145 billion in annual exports to the US.
Japan’s trade envoy pushes for breakthrough
In response to the pressure, Japan’s chief trade negotiator Ryosei Akazawa, flew to Washington last week for a seventh round of talks with US Commerce Secretary Howard Lutnick. While the initial meeting was held in person, two subsequent conversations took place over the phone, indicating urgency but also unresolved sticking points. Japanese government statements over the weekend described the discussions as “fruitful” but offered no concrete signs of progress.
Akazawa has pushed for a comprehensive agreement that includes sector-specific tariff relief, especially for autos. He emphasised that Japan’s automakers have invested more than $60 billion in the US, creating 2.3 million American jobs, and warned that the 25 per cent tariff is “unacceptable”.
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Falling exports underscore growing risks
Trade data for May reinforces Tokyo’s concerns. Japanese exports fell for the first time in eight months, dropping 1.7 per cent year-on-year, while exports to the US plunged 11.1 per cent. The downturn reflects the chilling effect of looming tariffs, which had already prompted companies to front-load shipments earlier this year. Imports also fell 7.7 per cent, leading to a trade deficit of 637.6 billion yen ($4.39 billion) in May.
Economists warn that if the full range of US tariffs goes into effect, Japan’s exports to the US could fall by 20-30 per cent, shaving up to 1 percentage point from GDP and risking a technical recession after the economy already contracted in the first quarter. While Trump maintains that the US can unilaterally set its trade terms, failure to reach a deal with Japan could deal a major blow to both countries’ economic outlooks.
AloJapan.com